This article introduces the concept of Earned Schedule and how you can implement basic concepts in your performance reporting.

The Earned Value Management (EVM) concept was initially introduced in the United States Department of Defence, NASA and in other areas to overcome the issues in trying to report basic cost performance in projects.

There is plenty of material online that goes into detail on the concept of Earned Value and its origins, and it certainly is a handy method of measuring performance on a project, especially in a project’s early days.

However, there are some fundamental things to keep in mind when using Earned Value metrics. Typically EV measures are in units such as dollars or hours and not in units of time (eg, weeks, months, days).

In addition, as a project nears completion, the Schedule Performance Index (SPI) trends towards 1 which indicates a project is finishing on time.

This may not necessarily be the case as this article demonstrates.

The importance of Schedule in Review of SPI

It is important to ensure we avoid looking at SPI in isolation of the schedule itself.

Let’s look an example where a project has finished late. A typical Earned Value s-curve might look like the below image:

1.Scurve

Here we can see the Planned Value (PV) and the Earned Value (EV) curves in blue and green respectively. It can be noted that the project was to conclude at week 20 (where PV reaches the total budget) however the project finishes (earning value) in week 23, thus indicating it finished late.

If we track SPI over this time period, we notice how the final weeks of the project show a major increase in performance week on week:

2.SPI

In examining the SPI trend, the project continues to progress at a poor pace yet from week 16 onward a major increase in performance is noted.

The reason for this is because of the SPI calculation:

SPI = EV / PV

The key here is that at the end of the project, PV is equal to the total budget at completion (BAC).

So in our example, our BAC is 57,000 hours, then at the end of the project we will have completed all work and earned 57,000 hours.

Therefore:

SPI = 57,000 / 57,000

SPI = 1.0

The perceived “issue” with SPI is that at some point the metric needs to be used only in a cost sense and not related to the schedule. If a schedule has slipped, we must look at the schedule itself and not rely simply on a metric whose sole purpose is to look at cost and hours.

After all, if SPI is 1.0 it means we have completed all of our project scope, regardless if it was on time or late!

SPI, if not carefully examined, can also be somewhat misleading. Projects tend to focus on critical and near-critical activities first and foremost. In some instances therefore, activities with sufficient float can be delayed which means their value is not being earnt. This can artificially lower the overall SPI value.

Enter the Concept of Earned Schedule

Earned Schedule utilises the concept of time (days, weeks, months) to extrapolate schedule performance.

The intent of the Earned Schedule concept is to create a performance index that is useable to the end of a project.

Earned Schedule still relies on planned and earned value figures such as hours, quantities, or currency. These can still be expressed in dollars or hours or whatever unit is required.

3.ES

What Earned Schedule examines is “how much have we earnt and in what reporting period we were supposed to have earnt that value”.

There are a few key terms to consider with Earned Schedule:

  • Actual Time (AT) – time now or the status date/ reporting period
  • Earned Schedule (ES) – the point when current progress was planned to be earnt
  • Planned Duration (PD) – the planned project duration
  • Estimated Duration (ED) – the estimated project duration based on progress
  • Planned Completion Date (PCD) – the planned /baselined end date
  • Estimated Completion Date (ECD) – the estimated date for completion

Firstly, ES is calulated by the following formula:

ES = C + I

Where:

  • C - is the number of reporting periods completed where Planned Value is less than or equal to Earned Value
  • I - the increment or partial reporting period earned where Planned Value is less than or equal to Earned Value

I is calculated as follows:

I = (EV - PVc) / (PVc+1 - PVc)

Where:

  • PVc is the planned value at the completed reporting period
  • PVc+1 is the planned value of the partial period earned

Schedule Performance Index (SPI(t)) and Schedule Variance (SV(t)) can be calculated as follows:

SPI(t) = ES / AT

SV(t) = EX – AT

And Estimated Duration (ED) can be calculated as follows:

ED = PD / SPI(t)

Making use of the SPI(t) calculation we can forecast the project’s end date based on current performance trends.

So how can I trust SPI?

We have to remember that SPI is a basis for measuring cost and effort. SPI is useful in projecting schedule overruns earlier in a project but as a project progresses it can become unreliable for forecasting schedule slippage.

SPI shows the value of work completed for every unit (cost or hours) of work planned in the baseline. In our example SPI is 0.55 which indicates that for every hour or work planned we are only achieving half of what we had planned to complete.

Think of it this way; If we get to the end of our project and SPI is 1 it means that for every hour planned, all of those hours are complete. 

The other thing to note is that if a project is delayed, project teams will focus on the critical path and those non-critical activities will slip. This means that less work is earned compared to the baseline. Schedule slippage can only be assessed by looking at the schedule itself.

SPI is a measure of effort and cost, not time, so it is still useful!

More Reading, Sample Data and Templates

Its fair to say that Earned Schedule is the brain child of Walter Lipke's work, which can be accessed via the Earned Schedule website: https://www.earnedschedule.com/.

For a more indepth presentation there is a great video that explains the concept visually. There are also plenty of template calculators available so that you can implement Earned Schedule on your project.

 

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March 07, 2022

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